BellSouth will continue to look to bundles to make its services “stickier,” said Ron Dykes, CFO of BellSouth, speaking at Banc of America’s “Media, Telecommunications, and Media” conference in New York. Consumer average revenue per user (ARPU) now stands at $61 for packages combining local access, long distance voice and DSL. BellSouth plans to “stimulate” the DSL market with price cuts in specific markets and for customers choosing service bundles. BellSouth it would be nice to add video to the bundles, but it has no plans to become a video provider itself.
On the competitive front, Dykes said BellSouth’s rate of loss for local access lines is slowing. In Q1 2003, BellSouth lost 914,000 access lines, or 3.6% of its base. This reflects a slow economy and retail line loss to UNE-P competitors. Cingular Wireless is regaining customer growth momentum with the addition of 189,000 net adds in Q1 2003 along with reduced churn. Dykes said the transformation of Cingular Wireless’ network to GSM is on track.
BellSouth is committed to further reducing its fixed cost structure. Steps include workforce reductions, lower CAPEX, reduced debt costs and cost controls for its Latin American businesses. Meanwhile, BellSouth will increase its advertising budget.
Dykes said the company’s aggressive “Answers” advertising campaign for packaged services is delivering clear results in terms of greater ARPU per line and reduced churn (DSL reduces churn for local access services by 45%).
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- During Q1 2003, BellSouth added 101,000 DSL customers, giving it a total of 1,122,000 customers. DSL customers now represent 7% of BellSouth-qualified lines.
At the end of Q1 2003, BellSouth had more than 1.9 million consumer and business long distance customers, nearly double the level three months ago. BellSouth now has 13% consumer LD penetration and 24% business LD penetration.
